Nigel Midgley v Vossloh Cogifer UK Ltd

The Employment Appeal Tribunal held that an employment tribunal had committed an inadvertent error of law by relying on parts of a costs warning letter which, in its unredacted form, began with an express "without prejudice" heading and offered that no costs application would be made if the claimant withdrew his claims. The tribunal's costs order (limited from 16 April 2021 to £10,000) was materially founded on that redacted letter. Because the without prejudice status had been concealed from the tribunal by redaction, the tribunal was drawn into error and the costs order was quashed.

The decision engages the without prejudice doctrine, issues of waiver and severance (not decided because they were not argued before the tribunal) and the tribunal's duty to an unrepresented litigant under established authority. The appeal was allowed and the costs order set aside.

Background and parties: The claimant brought claims including unfair dismissal by reason of making protected disclosures and a detriment under section 47B of the Employment Rights Act 1996. Following a hearing, an employment tribunal ordered the claimant to pay the respondent's costs from 16 April 2021 limited to £10,000. The claimant appealed to the Employment Appeal Tribunal.

Procedural history: Permission to appeal was given by His Honour Judge Auerbach on a single ground: that the employment tribunal erred by relying on a "without prejudice" costs letter dated 26 March 2021. The claimant's substantive appeal against the tribunal's findings was dismissed by His Honour Judge Auerbach at a rule 3(10) hearing on the same day. The respondent did not attend the EAT hearing; it relied on written material. The claimant had been a litigant in person at tribunal and was assisted at the EAT under the Advocates' Scheme.

(i) Nature of the relief sought: The appellant sought to overturn the tribunal's costs order which had required him to pay the respondent's costs from 16 April 2021 limited to £10,000.

(ii) Issues framed by the court:

• Whether the employment tribunal properly relied on parts of the 26 March 2021 letter in assessing costs when the letter, in unredacted form, began with an express "without prejudice" heading and offered that no costs application would be made if the claimant withdrew;
• Whether any waiver or valid severance of the without prejudice material had occurred (the court noted these arguments but did not decide them because they had not been argued before the tribunal); and
• Whether reliance on the redacted letter led to an error of law vitiating the costs decision, given the tribunal's duty to an unrepresented litigant.

(iii) Reasoning and outcome: The EAT examined the letter and the tribunal's reasons and concluded the redacted parts plainly revealed the letter's without prejudice character and its express offer that no costs would be sought if the claimant withdrew. The tribunal's costs reasoning repeatedly relied on the letter and treated it as a conventional costs warning; the EAT concluded the tribunal was unaware of the letter's without prejudice status. Because the issue of waiver or severance had not been argued before the tribunal, the EAT could not resolve those matters on appeal and did not need to do so. Given the centrality of the letter to the costs decision, the tribunal's reliance upon the redacted letter constituted an inadvertent error of law. The appeal was allowed and the costs order quashed. The EAT declined to remit the matter to the employment tribunal in the circumstances.

Appeal allowed. The EAT held that the employment tribunal had been drawn into an inadvertent error of law by relying on a redacted costs letter which, in unredacted form, began with an express "without prejudice" heading and offered that no costs application would be made if the claimant withdrew. Because the without prejudice status had been concealed from the tribunal, the costs order was vitiated and was quashed. The EAT did not remit the matter.

Employment Tribunal decision on costs made 3 September 2021 (tribunal ordered claimant to pay respondent's costs from 16 April 2021 limited to £10,000). Permission to appeal granted by His Honour Judge Auerbach on a single ground; substantive appeal dismissed by His Honour Judge Auerbach at a rule 3(10) hearing on the same day. Appeal to the Employment Appeal Tribunal resulting in [2024] EAT 149.